While the prime minister spelled out his hopes for withdrawal on his visit to Afghanistan today, in a village near Kandahar there was a stark reminder of how far from stability the country really is.

There, residents of Nagahan struggled to identify their dead amid the devastation caused by a massive suicide bomb attack on a wedding party that killed at least 40 and wounded more than 70.

The aftermath of Wednesday night's explosion, which occurred in a courtyard where men were eating a wedding feast, "looked like doomsday", said Ahmad Shah, one of the guests.

Haji Muhammad, a shopkeeper whose brother and cousin were wounded, said some of the guests were still missing. "We only managed to find pieces of human flesh that were beyond recognition – you cannot imagine how terrible it was," he said. Instead of celebrating a marriage, the residents of Nagahan village were rushing to bury their dead within the traditional 24 hours of death.

The explosion happened at around 9pm yesterday night in the men's area of a party attended by several members of the Local Defence Initiative (LDI), a militia formed earlier this year with the help of US special forces. The groom, Abdullah Aka, a member of the LDI, and his commander, Haji Muhammad Nabi Kako, were wounded in the attack. The carnage was so great that the International Committee of the Red Cross (ICRC) made a rare public statement condemning the violence "in the strongest terms".

Jacques de Maio, the ICRC's head of operations for South Asia, said the attack violated the basic principles of the laws of war. "Last night's bombing is a shocking reminder of the extent to which civilians are exposed to the rapidly intensifying armed violence in southern Afghanistan," said De Maio.

Nick Carter, the British general who commands multi-national troops in the province, said the attack "demonstrates the Taliban's sickening and indiscriminate tactics to try to intimidate the citizens of Afghanistan". As often happens with attacks where large numbers of civilian deaths shock public opinion, a Taliban spokesman denied to local media that the movement had anything to do with the slaughter.

In Kandahar city many people were adamant that the attack must have been caused by a foreign air strike, but investigators who went to the village said the nature of the shrapnel damage, the fact that buildings had not collapsed and trees had not caught fire all indicated it was some sort of home-made bomb. In Nagahan there was no doubt that the devastation was caused by a suicide bomber targeting policemen and members of the local militia.

US army officers had been pleased with progress made by the LDI in Nagahan, a broadly pro-government area of the lush Arghandab valley.

War planners say such informal defence forces have an important role to play in improving security in areas where trained Afghan police and soldiers are not yet available. Critics have long feared that such defence forces could create problems for communities if the militias get out of control or if they attract violent attacks from insurgents.

Tribal elder Haji Shah Aka, 60, said the village had supported the militia because it had been effective in keeping the Taliban out of their area.

"The Taliban did this to terrify people who want to protect their areas and to send a message that the people of Nagahan should not support the government," Aka said.

Despite the dreadful attack the militia would continue its work he said. The Taliban "will not terrify us or our people with such cowardly acts", he added.